Assignment No. 6

Case Digests in SCARP AND SPECPRO

Submitted by Christopher G. Halnin

To Atty. Christian “Kit” Villasis

1. Philippine Coconut Authority vs. Primex Coco Products

G.R. No. 163088

July 20, 2006

FACTS:

Executive Order (E.O.) No. 826 was issued by the President of the Philippines. Section 1

thereof reads:

Section 1. Prohibition. Except as herein provided, no government agency or instrumentality

shall hereafter authorize, approve, or grant any permit or license for the establishment or

operations of new desiccated coconut processing plants, including the importation of

machinery or equipment for the purpose. In the event of a need to establish a new plant, or

expand the capacity, relocate or upgrade the efficiencies of any existing desiccated plant,

the Philippine Coconut Authority may, upon proper determination of such need and

evaluation of the condition relating to: 

a. the existing market demand;

b. the production capacity prevailing in the country or locality;

c. the level and flow of raw materials; and

d. other circumstances which may affect the growth or viability of the industry

concerned.

may authorize or grant the application for the establishment or expansion of capacity,

relocation or upgrading of efficiencies of such desiccated coconut processing plant, subject to

the approval of the President.

The PCA adopted Resolution No. 058-87 authorizing the establishment and operation of

additional PCA plants in view of the increasing demand for desiccated coconuts in the world

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market. The opening of new plants was made subject to implementing guidelines and

approval of the President.

Primex is a domestic corporation engaged in the manufacture of desiccated coconut. It filed

an application for registration with the PCA as a new exporter/trader/manufacturer of DCN

and paid the sum of P600.00 as registration fee. However, PCA did not immediately issue the

corresponding certificate of registration. This prompted Primex to file a petition for

mandamus against the PCA and its then Administrator Charles Avila before the Regional

Trial Court (RTC) of Lucena City, Branch 59. 

 The court rendered judgment in favor of Primex and ordered the PCA to act on the

application. Consequently, the PCA Governing Board adopted Resolution No. 044-92

approving the application for registration of Primex subject to its compliance with the

necessary requirements and pertinent regulations of the PCA and the final approval of the

President of the Philippines.

Seven PCA processing companies belonging to the Association of Philippine Coconut

Desiccators (APCD) filed with the RTC a petition for prohibition with a plea for injunctive

relief to enjoin the PCA from processing and issuing a license to Primex. The court issued a

writ of preliminary injunction against the PCA. The latter complied and refrained from

processing and issuing a license to Primex.

The PCA Governing Board issued Resolution No. 018-93 entitled Policy Declaration

Deregulating the Establishment of New Coconut Processing Plants. It is provided therein

that, henceforth, PCA shall no longer require any coconut oil mill, coconut oil refinery,

coconut desiccator, coconut product processor/factory, coconut fiber plant or any similar

coconut processing plant to apply with PCA and the latter shall no longer issue any form of

license or permit as a condition prior to establishment or operation of such mills or plants. It

stated further that PCA shall limit itself only to simply registering the aforementioned

coconut product processors for the purpose of monitoring their volumes of production,

administration of quality standards with the corresponding service fees/charges.The PCA

issued Certificate of Registration No. 014254 to Primex. In the meantime, the APCD filed a

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petition for certiorari and mandamus against the PCA in this Court to nullify Resolution No.

018-93.

While the case was pending in this court, the PCA renewed the registration of Primex as a

coconut product processor every year. The Court rendered a decision declaring PCA Board

Resolution No. 018-93 and all certificates of registration issued under it null and void for

having been issued in excess of the power of PCA. The Court ruled that the PCA cannot

renounce its power to regulate that which has been set up by the very law creating it.

The PCA wrote Primex and informed the latter that Memorandum Circular No. 01, Series of

1999 and the issuance of provisional certificate of registration in its favor are equitable

interim measures to enable the parties affected by the Supreme Court Decision to comply

with subsisting PCA rules and regulations governing the establishment and operation of DCN

plants, and that said measures were adopted after the consultation meetings conducted by

PCA with the desiccators and after the submission of their position papers. On its second

query, the PCA replied that the records of its registration office do not show that Primex has

been issued any valid certificate of registration for 1990, nor any renewal thereof despite the

alleged official receipt purportedly representing the registration fee. Primex was issued a

certificate of registration only on March 25, 1993 or after the promulgation of the nullified

PCA Resolution No. 018-93. The PCA requested Primex to furnish it with authenticated

copies of the certificate of registration for year 1990 and the purported renewals thereof as

mentioned in its letter for reconsideration.

Primex wrote the PCA insisting that Certificate of Registration No. 014254 was not issued to

it by virtue Resolution No. 018-93, which was nullified by the Supreme Court, but by virtue

of the RTC decision in Civil Case No. 91-39 and PCA Resolution No. 044-92.

Primex was prompted to file a petition for mandamus against the PCA and its Administrator

Eduardo Escueta before the RTC of Quezon City. Primex alleged, inter alia, that it has

established beyond doubt that there was a final and executory decision issued by the RTC of

Lucena City, Branch 69 ordering the PCA to take action on its application for registration

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and that the said application has been approved by the PCA Governing Board on per

Resolution No. 044-92.There is also no doubt that the certificate of registration was issued

not by virtue of Resolution No. 018-93 which was declared null and void by the Supreme

Court but by virtue of Resolution No. 044-92. PCA had absolutely no reason to issue only a

provisional certificate of registration valid only for six (6) months since it (Primex) has been

operating as DCN since September 28, 1990. As a result of the issuance of only a provisional

certificate of registration, it would suffer damages in its domestic and export business of at

least P5 million per month.

The RTC rendered a Decision in favor of the petitioner and ordered the PCA to issue

to Primex a regular certificate of registration not only for the calendar year 1999 but also

annually thereafter upon its compliance with all the legal requirements for registration. The

CA affirmed the ruling of the court a quo that Primex was able to establish its legal right to a

permit as exporter/trader/manufacturer of desiccated coconut by virtue of PCA Resolution

No. 044-92.

ISSUE:

Whether or not the issuance of a registration by the PCA a discretionary or ministerial act?

HELD:

The petition is meritorious.Section 3, Rule 65 of the 1997 Rules of Civil Procedure reads:

SEC. 3. Petition for mandamus. When any tribunal, corporation, board, officer or person

unlawfully neglects the performance of an act which the law specifically enjoins as a duty

resulting from an office, trust, or station, or unlawfully excludes another from the use and

enjoyment of a right or office to which such other is entitled, and there is no other plain,

speedy and adequate remedy in the ordinary course of law, the person aggrieved thereby

may file a verified petition in the proper court, alleging the facts with certainty and

praying that judgment be rendered commanding the respondent, immediately or at some

other time to be specified by the court, to do the act required to be done to protect the

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rights of the petitioner, and to pay the damages sustained by the petitioner by reason of

the wrongful acts of the respondent.

 

Mandamus lies to compel the performance, when refused, of a ministerial duty, but not to

compel the performance of a discretionary duty.A purely ministerial act or duty is one which

an officer or tribunal performs in a given state of facts, in a prescribed manner, in obedience

to the mandate of a legal authority, without regard to or the exercise of his own judgment

upon the propriety or impropriety of the act done. The duty is ministerial only when the

discharge of the same requires neither the exercise of official discretion or judgment.When

an official is required and authorized to do a prescribed act upon a prescribed contingency,

his functions are ministerial only, and mandamus may be issued to control his action upon

the happening of the contingency.

 

For a writ of mandamus to be issued, it is essential that petitioner should have a clear legal

right to the thing demanded and it must be the imperative duty of the respondent to perform

the act required. The writ neither confers powers nor imposes duties. It is simply a command

to exercise a power already possessed and to perform a duty already imposed. Mandamus

applies as a remedy only where petitioners right is founded clearly in law and not when it is

doubtful. The writ will not be granted where its issuance would be unavailing, nugatory, or

useless.

 

If the law imposes a duty upon a public officer and gives him the right to decide how or

when the duty shall be performed, such duty is discretionary and not ministerial.

Petitioner is not mandated to approve an original application for a certificate of registration

or a renewal thereof on an annual basis merely based on the allegations contained in the

application and the payment of the registration fees therefor. The PCA is tasked to first

inquire into and ascertain, after an investigation, whether the applicant has complied with

the a priori procedural and substantive conditions to the approval of said application as

provided in E.O. No. 826; Administrative Order No. 003, Series of 1981; and Administrative

Order No. 002, Series of 1991.

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Moreover, when the RTC rendered judgment on January 18, 2000, the period for which the

renewal certificate was sought had already expired. Case law is that mandamus will not be

issued to compel the renewal of a license for a period which has expired. If the right sought

to be enforced by writ of mandamus is or has become a mere abstract right, enforcement of

which will be of no substantial or practical benefit to the plaintiff, the writ will not issue

though the applicant would otherwise be entitled to it.To warrant the issuance of a writ of

mandamus, it must appear that the writ will be effectual as a remedy, it should be denied

where it would be useless by reason of events occurring subsequent to commencement

proceedings.

Mandamus is never granted to compel the performance of an act until there has been an

actual, as distinguished from an anticipated, refusal to act.This is true even if there is a strong

presumption that the persons whom it is sought to coerce by the writ will refuse to perform

their duty when the proper time arrives. Its function is to compel the performance of a

present existing duty as to which there is default. It is not granted to take effect prospectively,

and it contemplates the performance of an act which is incumbent on respondent when the

application for a writ is made.

2. Nilo Paloma vs. Danilo Mora

G.R. No. 157783

September 23, 2005

FACTS:

Petitioner Nilo Paloma was appointed General Manager of the Palompon, Leyte Water

District by it Board of Directors in 1993. His services were subsequently terminated by virtue

of Resolution No.8-95, which was passed by respondents as Chairman and members of the

Board of the Palompon, Leyte Water District.

Petitioner filed a petition for mandamus with prayer for preliminary injunction with damages

before the RTC to contest his dismissal with the prayer to be restored to the position of

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General Manager. Petition argued that his dismissal was a "capricious and arbitrary act on the

part of the Board of Directors, constituting a travesty of justice and a fatal denial of his

constitutional right to due process for the grounds relied upon therein to terminate him were

never made a subject of a complaint nor was he notified and made to explain the acts he was

said to be guilty of."

The trial court DISMISSED the petitioner for being a premature cause of action. MR was

denied.

Petitioner also filed a Complaint with the CSC against respondents for alleged Violation of

Civil Service Law and Rules and for Illegal Dismissal, but it was also dismissed.

Upon appeal, the Court of Appeals affirmed the assailed orders of the RTC and CSC. MR

was denied. Hence, the instant petition.

ISSUE:

Whether or not Mandamus will lie to compel the Board of Directors of the Palompon, Leyte

Water District to reinstate the General Manager thereof?

HELD:

The Court held in the negative. Mandamus does not lie to compel the Board of Directors of

the Palompon, Leyte Water District to reinstate petitioner because the Board has the

discretionary power to remove him under Section 23of P.D. No. 198, as amended by P.D.

No. 768. It lies to compel the performance, when refused, of a MINISTERIAL DUTY , but

NOT to compel the performance of a DISCRETIONARY DUTY. It will not issue to control

or review the exercise of discretion of a public officer where the law imposes upon said

public officer the right and duty to exercise his judgment in reference to any matter in which

he is required to act. It is his judgment that is to be exercised and not that of the court.

3. Rufina Chua vs. Court of Appeals

G.R. No. 140842            

April 12, 2007

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FACTS:

Petitioner filed an information for estafa against respondent Chiok. The trial court

promulgated its decision convicting respondent of estafa. The prosecution filed a motion for

cancellation of bail on the ground that Chiok might flee or commit another crime. The court

then issued an Omnibus Order canceling respondent’s bail, denying his motion for

reconsideration of the judgment and ordering him to appear before the court. Chiok filed with

the CA a petition for certiorari with application for Temporary Restraining Order (TRO) and

a writ of preliminary injunction assailing the Omnibus Order canceling his bail. The trial

court issued a warrant for Chiok’s arrest. The CA issued a TRO enjoining the lower court

from implementing the Omnibus Order. It then issued a writ of preliminary injunction

enjoining the arrest of Chiok. The CA reasoned that the offense of estafa is a non-capital

offense and the probability respondent will flee is merely conjectural; hence, he should not

be deprived of his liberty. Petitioner thus filed a motion for certiorari.

ISSUE:

Whether or not the CA acted with grave abuse of discretion amounting to lack or in excess of

jurisdiction when it issued the writ of preliminary injunction?

HELD:

The petition is meritorious. Respondent’s remedy against the trial court’s Omnibus Order is

by filing a motion for review with the CA in the same regular appeal proceedings and not in a

special civil action or special proceeding as it contravenes the rule against multiplicity of

suits. Further, it has not been shown that respondent has a clear existing right to be protected,

which is a requirement for the issuance of a writ of preliminary injunction. He has no right to

bail based on the penalty of his conviction and his failure to appear during the proceedings. If

the judgment is for conviction and the failure of the accused to appear was without justifiable

cause, he shall lose the remedies available in these Rules against the judgment and the court

shall order his arrest. Clearly, the Court of Appeals acted with grave abuse of discretion in

granting the writ of preliminary injunction.

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4. JG Summit Holdings vs. Court of Appeals

G.R. No. 124293              

November 20, 2000

FACTS:

The National Investment and Development Corporation (NIDC), a government corporation,

entered into a Joint Venture Agreement (JVA) with Kawasaki Heavy Industries, Ltd. for the

construction, operation and management of the Subic National Shipyard, Inc., later became

the Philippine Shipyard and Engineering Corporation (PHILSECO). Under the JVA, NIDC

and Kawasaki would maintain a shareholding proportion of 60%-40% and that the parties

have the right of first refusal in case of a sale.

Through a series of transfers, NIDC’s rights, title and interest in PHILSECO eventually went

to the National Government. In the interest of national economy, it was decided that

PHILSECO should be privatized by selling 87.67% of its total outstanding capital stock to

private entities. After negotiations, it was agreed that Kawasaki’s right of first refusal under

the JVA be “exchanged” for the right to top by five percent the highest bid for said shares.

Kawasaki that Philyards Holdings, Inc. (PHI), in which it was a stockholder, would exercise

this right in its stead.

During bidding, Kawasaki/PHI Consortium is the losing bidder. Even so, because of the right

to top by 5% percent the highest bid, it was able to top JG Summit’s bid. JG Summit

protested, contending that PHILSECO, as a shipyard is a public utility and, hence, must

observe the 60%-40% Filipino-foreign capitalization. By buying 87.67% of PHILSECO’s

capital stock at bidding, Kawasaki/PHI in effect now owns more than 40% of the stock. Not

obtaining a favorable decision petitioner pushed for the elevation of decision to the Court en

Banc.

ISSUE:

Whether or not there was grave abuse of discretion in awarding the bid contract?

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HELD:

No. Grave abuse of discretion implies a capricious, arbitrary and whimsical exercise of

power. The abuse of discretion must be so patent and gross as to amount to an evasion of

positive duty or to a virtual refusal to perform a duty enjoined by law, as to act at all in

contemplation of law, where the power is exercised in an arbitrary and despotic manner by

reason of passion or hostility.

The facts in this case do not indicate any such grave abuse of discretion on the part of public

respondents when they awarded the CISS contract to Respondent SGS. In the Invitation to

Prequalify and Bid, the CISS Committee made an express reservation of the right of the

Government to "reject any or all bids or any part thereof or waive any defects contained

thereon and accept an offer most advantageous to the Government." It is a well-settled rule

that where such reservation is made in an Invitation to Bid, the highest or lowest bidder, as

the case may be, is not entitled to an award as a matter of right. Petition denied.

5. Ma. Jeanette C. Tecson vs. COMELEC

G.R. No. 161434

March 3, 2004

FACTS:

Victorino X. Fornier, petitioner initiated a petition before the COMELEC to disqualify FPJ

and to deny due course or to cancel his certificate of candidacy upon the thesis that FPJ made

a material misrepresentation in his certificate of candidacy by claiming to be a natural-born

Filipino citizen when in truth, according to Fornier, his parents were foreigners; his mother,

Bessie Kelley Poe, was an American, and his father, Allan Poe, was a Spanish national, being

the son of Lorenzo Pou, a Spanish subject. Granting, petitioner asseverated, that Allan F. Poe

was a Filipino citizen, he could not have transmitted his Filipino citizenship to FPJ, the latter

being an illegitimate child of an alien mother. Petitioner based the allegation of the

illegitimate birth of respondent on two assertions - first, Allan F. Poe contracted a prior

marriage to a certain Paulita Gomez before his marriage to Bessie Kelley and, second, even if

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no such prior marriage had existed, Allan F. Poe, married Bessie Kelly only a year after the

birth of respondent.

Petitioners also questioned the jurisdiction of the COMELEC in taking cognizance of and

deciding the citizenship issue affecting Fernando Poe Jr. They asserted that under Section

4(7), Article VII of the 1987 Constitution, only the Supreme Court had original and exclusive

jurisdiction to resolve the basic issue of the case.

ISSUE:

Whether or not the Supreme Court has the power to review COMELEC en banc decisions?

HELD:

The Court held in the affirmative. SC has the power to review the COMELEC’s decision to

deny Fornier’s petition to disqualify the candidacy of FPJ for alleged misrepresentation of

material fact. Decisions of COMELEC on disqualification cases may be reviewed by the SC

in action for certiorari under Rule 65. SC can also determine Whether or not there has been

grave abuse of discretion by any branch of the government.

COMELEC has jurisdiction, petitions of Tecson and Velez are dismissed. SC’s jurisdiction

as the judge of all contests relating to the election, returns and qualifications relates to the

President or Vice-President not the candidates. The SC en banc shall be sole judge of all

contests relating to the election, returns and qualifications of the President and Vice –

President. Election contests consist of either, election protest which only a registered

candidate who would have received second or third highest number of votes could file; and a

quo warranto which is an action against a person who usurps, intrudes into, or unlawfully

holds or exercises a public office. Two distinct remedies but both have one objective in view

to dislodge winning candidate from office. 

But jurisdiction of Supreme Court, does not include cases questioning the qualifications of a

candidate for the presidency or vice-presidency before the elections are held.

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FPJ is a natural born citizen. He is therefore a qualified candidate. The 1935 Constitution,

during which regime respondent FPJ was born, confers citizenship to all persons whose

fathers are Filipino citizens regardless of whether such children are legitimate or illegitimate.

6. Fortuno vs. Palma

G.R. No. 70203

December 18, 1987

FACTS:

Petitioner Salvio B. Fortuno and respondent Joel David S. Abante were candidates for the

position of director to represent District V of the Camarines Sur II Electric Cooperative, Inc.

(CASURECO II) at the elections of February 9, 1985. On January 30, 1985, Abante filed

with the National Electrification Administration (NEA) a petition to disqualify Fortuno as

candidate alleging that he is not a resident of the area coverage of District V as required by

the By-laws of the corporation. The NEA directed the CASURECO Board of Directors to

take appropriate action on the petition in accordance with the By-laws and Election Code.

The Board indorsed the petition to the District Election Committee (DEC) which is the body

charged with the duty of deciding all election matters, including protests, quarries, referrals,

postponements and nullification.

The DEC directed Fortuno to submit his comment thereto within 48 hours which was duly

complied with. After a hearing on February 9, 1985, the DEC denied Abante's petition to

disqualify Fortuno finding that he is a resident of the area coverage of District V.

On February 9, 1985, the election was held as a result of which Fortuno obtained 1,429 votes

while Abante received 637 votes. Accordingly, the DEC proclaimed Fortuno as the duly

elected director for District V.

On February 10, 1985, a quo warranto petition with prayer for preliminary injunction and

temporary restraining order was filed by Abante in the Regional Trial Court of Naga City

docketed as No. RTC-05-607 entitled "Joel David S. Abante vs. Salvio B. Fortuno, and

CASURECO II." On the day of the hearing of the preliminary injunction the issue of

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jurisdiction of the trial court over the case was raised by said defendants. On March 13, 1985,

an order was issued by the trial court upholding its jurisdiction over the subject matter. A

motion for reconsideration of said order was filed by defendants but this was denied in an

order of March 16, 1985.

On March 18, 1985, the trial court issued an order resetting the hearing for preliminary

injunction on March 25, 1985 to enable defendants to elevate the matter to the appellate court

and issued the restraining order enjoining Fortuno from assuming or otherwise performing

the functions of a member of the Board of Directors of CASURECO II until further orders of

the Court and the respondent CASURECO II to observe and implement the said restraining

order.

Hence, the herein petition for certiorari and prohibition with prayer for preliminary

injunction or temporary restraining order filed on March 18, 1985 with this Court wherein

petitioners seek to set aside said orders of March 16 and 18, both of 1985 of the trial court

and that a restraining order be issued against the trial court taking further action on the case

until further orders.

On March 19, 1985, a supplemental petition was filed by petitioners informing the Court of

the restraining order the respondent court issued on March 18, 1985 which in effect restrains

the continuance in the performance of the duties of Fortuno as an incumbent member of the

Board of Directors who was elected in 1981 whose term of office will end on March 30,

1985 and that assuming that he was not a resident of the area of coverage he represents he

cannot be arbitrarily suspended or removed from office so that petitioners pray for a

restraining order against the enforcement of said order and for the respondent Judge from

taking further proceedings in the case.

On March 25, 1985, without giving due course to the petition the respondents were required

to comment thereon.

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The comment thereon having been filed by the respondents, on October 9, 1985 the Court

gave due course to the petition and required the parties to submit their simultaneous

memoranda. Only petitioners submitted their memoranda. The case is now submitted for

deliberation.

ISSUE:

Whether or not the Regional Trial Court (RTC) has jurisdiction over quo warranto

proceedings involving the qualification for membership of the Board of Directors of an

electric cooperative.

HELD:

The Court held in the affirmative. Under Section 1, Rule 66 of the Rules of Court a quo

warranto proceeding maybe instituted to determine the right to the use or exercise of a

franchise or office and to oust the holder from its enjoyment, if his claim is not well-

founded, or if he has forfeited his right to enjoy the privilege.  Where the dispute is on the

eligibility to perform the duties by the person sought to be ousted or disqualified a quo

warranto is the proper action. 

Under Section 6, Rule 66 of the Rules of Court it is provided:

SEC. 6. When an individual may commence such an action. — A person

claiming to be entitled to a public office or position usurped or unlawfully

held or exercised by another may bring an action therefore in his own name.

In this connection this Court held that an office in a private corporation is an office of public

character in such a sense and to such an extent as to render the remedy available to a person

having an interest which is injuriously affected. The action may also be brought by a public

utility whose rights are invaded by another. 

The Supreme Court has concurrent jurisdiction over quo warranto proceedings with the

Regional Trial Court in the province in which the defendant or one of the defendants reside,

or when defendant is a corporation, in the province in which it is domiciled or has a place of

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business; but when the Solicitor General of the Philippines commences the action, it may be

brought in a Court of First Instance in the City of Manila or the Supreme Court.

From the foregoing provision of the rules and rulings of this Court, the conclusion is

inescapable that the quo warranto proceeding filed in the RTC of Naga City questioning the

qualification of petitioner Fortuno is within the jurisdiction of said Court. Nowhere in the law

can We find any provision that excepts the electric cooperatives from its coverage.

True it is that the NEA has supervision and control over the directors of CASURECO II and

that under its election code respondent Abante has the remedy of appeal to the NEA within

72 hours which he did not avail of. Be that as it may, it does not deprive said respondent of

the right to avail of the right to file the quo warranto suit when it is shown that the DEC

committed a grave abuse of discretion or otherwise acted without jurisdiction or in excess of

its jurisdiction in the resolution of the qualification of Fortuno. 

The ruling of this Court in Lions Club International that the "courts will not interfere with

the internal affairs of an unincorporated association" cannot apply to the present case as

CASURECO II is clearly a duly organized private corporation in the Philippines.

Nevertheless, in said case this Court held that its proceedings (Lions Clubs International) are

nevertheless subject to judicial review "where law and justice so requires, and ..." where

there is fraud, oppression, bad faith, or where the action complained of is capricious,

arbitrary or unjust discriminatory. 

By the same token the case of Bataan Electric Cooperative is predicated on different

environmental facts. In said case, what is questioned is the qualification of the voters who

voted for the member of the board of directors and not of the one voted for and further the

elections sought to be prevented had already been held, so that the petition was considered

moot and academic. 

WHEREFORE, the petition is DISMISSED without pronouncement as to costs.

SO ORDERED.

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7. Macario E. Caesar vs. Filomeno Garrido

G.R. No. L-30705

March 25, 1929

FACTS :

A general election for an office in Mun. ofCabalia, Leyte was held on June 5, 1928. The

result of the election proclaimed that FilomenoGarrido was proclaimed elected for the public

office with a plurality of 27 votes over Macario E. Caesar. Trial court reversed the result of

the board of canvassers and found that Macario Caesar won over Garrido by a plurality of 71

votes. Judicial declaration was accordingly made ordering Macario Caesar had been elected

to the office and judgment was given against the Garrido for costs and expenses, including

the fees of the commissioners. Hence, Garrido appealed.

The contest was instituted by a motion to dismiss with the statement that Garrido was a duly

qualified elector in the municipality of Cabalian and was a registered candidate who had

received votes for the office of municipal president in the election mentioned. Upon the filing

of this motion, Garrido moved to dismiss on the ground that it was not alleged in the

Macarioś motion that the contestant was, at the time of the election, eligible to the office for

which he was a candidate. This motion to dismiss was overruled by the trial court on the two

grounds that the allegation that the protestant was a duly qualified elector and registered

candidate should be taken as implying that he was eligible to the office, and that, at any rate,

the ineligibility of a candidate is not proper matter of exception or defense in a contest over

an election. To this ruling the contesteeexcepted, and error is here assigned thereto.

ISSUE :

Whether or not the question as to the eligibility of a candidate for office should be involved

in a proceeding of contest?

HELD :

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The Court held in the negative. The ineligibility of the mover of an election contest,

supposing him to have been a duly registered candidate, is not available as a defense in the

contest proceeding. The reason is that the contest raises merely a question as to the number

of votes received by the opposing candidates.

Eligibility is a matter wholly apart from the question of the number of votes received by a

candidate, and its solution depends upon considerations quite different from those involved

in a contest.

As long as the law remained in this state, it was a rule that the eligibility of a candidate could

not be considered in an election contest (Topacio vs. Paredes, 23 Phil., 238). The law

concerning the removal of ineligible officials has, however, been charged; and it is now

provided that when a person, alleged to be ineligible, is elected to a provincial or municipal

office, his right thereto is to be tried, upon the relation of any elector of the province or

municipality concerned, in a special proceeding in the nature of an action of quo warranto;

and this proceeding must be instituted within the two weeks after the proclamation of the

election of the person whose right to office is questioned (Election Law, sec. 408, as

amended by Act No. 3387). The law now stands, the question of eligibility may be tried in a

judicial proceeding. But the proceeding in which it maybe tried is not a contest; and the

defense based on the alleged ineligibility of the contestant is completely incongruous with

the issue of an election protest.

Moreover, it is to be observed that the proceeding in the nature of quo warranto to try the

question of the eligibility of a candidate is to be instituted within the two weeks after the

proclamation of the person whose right to office is challenged. In the proceeding now before

us the contestant has never been proclaimed at all and will not be proclaimed, in the sense of

the law, until the decision of this court is published. The issue of ineligibility which is

attempted to be raised in the answer is premature.

Another reason readily suggests itself why the ineligibility of the contestant is not available

as a defense in this contest. This consists in the fact that, if the person who has received a

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majority of plurality of votes in any election is found to be ineligible, the result is that the

office is declared vacant and a new election has to be held to fill the vacancy. In the case

before us, if we should accept the defense of the ineligibility of the contestant and adopt the

course of dismissing the contest for that reason, the result would be that the contestee would

be in office though he in fact received fewer votes than the contestant. Thus, the eligibility of

the contestant must be made the subject of a separate proceeding at the proper juncture.

Judgment appealed by contesteeGarrido must be AFFIRMED, and it is so ordered, with

costs against the appellant.

8. Manila Electric Co.vs.Pineda

G.R. No. L-59791

February 13, 1992

FACTS:

On October 29, 1974, a complaint for eminent domain was filed by petitioner MERALCO

against forty-two (42) defendants with the Court of First Instance (now Regional Trial Court)

of Rizal, Branch XXII, Pasig, Metro Manila.

The complaint alleges that for the purpose of constructing a 230 KV Transmission line from

Barrio Malaya to Tower No. 220 at Pililla, Rizal, petitioner needs portions of the land of the

private respondents consisting of an aggregate area of 237,321 square meters. Despite

petitioner's offers to pay compensation and attempts to negotiate with the respondents', the

parties failed to reach an agreement.

On January 7, 1975, respondents Gil de Guzman and Teresa Bautista filed a motion for

contempt of court alleging, among other things that petitioner's corporate existence had

expired in 1969 and therefore it no longer exists under Philippine Laws.But despite the

opposition of the private respondents, the court issued an Order dated January 13, 1975

authorizing the petitioner to take or enter upon the possession of the property sought to be

expropriated.

18

On July 13, 1976, private respondents filed a motion for withdrawal of deposit claiming that

they are entitled to be paid at forty pesos (P40.00) per square meter or an approximate sum of

P272,000.00 and prayed that they be allowed to withdraw the sum of P71,771.50 from

petitioner's deposit-account with the Philippine National Bank, Pasig Branch. However,

respondents motion was denied in an order dated September 3, 1976.

Pursuant to a government policy, the petitioners on October 30, 1979 sold to the National

Power Corporation (Napocor) the power plants and transmission lines, including the

transmission lines traversing private respondents' property.

On February 11, 1980, respondent court issued an Order appointing the members of the

Board of Commissioners to make an appraisal of the properties.

On June 5, 1980, petitioner filed a motion to dismiss the complaint on the ground that it has

lost all its interests over the transmission lines and properties under expropriation because of

their sale to the Napocor. In view of this motion, the work of the Commissioners was

suspended. On June 9, 1981, private respondents filed another motion for payment. But

despite the opposition of the petitioner, the respondent court issued the first of the questioned

Orders dated December 4, 1981 granting the motion for payment of private respondents, On

December 15, 1981, private respondents filed an Omnibus Motion praying that they be

allowed to withdraw an additional sum of P90,125.50 from petitioner's deposit-account with

the Philippine National Bank which the court ruled; Acting on the Omnibus Motion dated

December 15, 1981 filed by Atty. Gil de Guzman, counsel for TeofiloArayon, Sr., Lucito

Santiago, Teresita Bautista and for himself, and it appearing that there is deposited in the

bank in trust for them the amount of P90,125.50 to guarantee just compensation of

P272,000.00, thereby leaving a balance of P161,475.00 still payable to them, the same is

hereby GRANTED.

Private respondents filed another motion dated January 8, 1982 praying that petitioner be

ordered to pay the sum of P169, 200.00.

19

In response to private respondents' motion for payment dated January 8, 1982, petitioner filed

an opposition alleging that private respondents are not entitled to payment of just

compensation at this stage of the proceeding because there is still no appraisal and valuation

of the property.

On March 26, 1982, petitioner filed a petition for preliminary injunction with this Court

seeking to enjoin respondent judge and all persons acting under him from enforcing the

Order dated March 22, 1982.

This Court issued a temporary restraining order addressed to respondent judge. A motion to

lift the restraining order was filed by the respondents. Despite a series of oppositions and

motions to lift the said order, this Court reiterated its stand and noted that the restraining

order is still effective.

The petitioner strongly maintains that the respondent court's act of determining and ordering

the payment of just compensation to private respondents without formal presentation of

evidence by the parties on the reasonable value of the property constitutes a flagrant violation

of petitioner's constitutional right to due process. It stressed that respondent court ignored the

procedure laid down by the law in determining just compensation because it formulated an

opinion of its own as to the value of the land in question without allowing the Board of

Commissioners to hold hearings for the reception of evidence.

Furthermore, petitioner argues that the respondent judge gravely abused his discretion in

granting the motion for execution pending appeal and consequently denying the petitioner's

motion to dismiss. Respondent judge should have ordered that Napocor be impleaded in

substitution of petitioner or could have at least impleaded both the Napocor and the petitioner

as party plaintiffs.

ISSUE:

20

Whether or not not the respondent court can dispense with the assistance of a Board of

Commissioners in evaluating just compensation in an expropriation proceeding?

HELD:

The applicable laws in the case at bar are Sections 5 and 8 of Rule 67 of the Revised Rules of

Court. In the case of Municipality of Biñan v. Hon. Jose Mar Garcia Garcia (G.R. No. 69260,

December 22, 1989, 180 SCRA 576, 583-584) In a procedure for eminent domain There are

two (2) stages in every action of expropriation.

The first is concerned with the determination of the authority of the plaintiff to exercise the

power of eminent domain and the propriety of its exercise in the context of the facts involved

in the suit

It ends with an order, if not of dismissal of the action, declaring that the plaintiff has

a lawful right to take the property sought for the public use or purpose described in

the complaint, upon the payment of just compensation to be determined as of the date

of the filing of the complaint". An order of dismissal, if this be ordained, would be a

final one, of course, since it finally disposes of the action and leaves nothing more to

be done by the Court on the merits.

The second phase of the eminent domain action is concerned with the determination by the

Court of "the just compensation for the property sought to be taken.

This is done by the Court with the assistance of not more than three (3)

commissioners. The order fixing the just compensation on the basis of the evidence

before, and findings of, the commissioners would be final, too. It would finally

dispose of the second stage of the suit, and leave nothing more to be done by the

Court regarding the issue.

In an expropriation case such as this one where the principal issue is the determination of just

compensation, a trial before the Commissioners is INDISPENSABLE to allow the parties to

present evidence on the issue of just compensation. Contrary to the submission of private

respondents, the appointment of at least three (3) competent persons as commissioners to

21

ascertain just compensation for the property sought to be taken is a MANDATORY

requirement in expropriation cases.

While it is true that the findings of commissioners may be disregarded and the court may

substitute its own estimate of the value, the latter may only do so for valid reasons, i.e., where

the Commissioners have applied illegal principles to the evidence submitted to them or

where they have disregarded a clear preponderance of evidence, or where the amount

allowed is either grossly inadequate or excessive (Manila Railroad Company v. Velasquez,

32 Phil. 286). Thus, trial with the aid of the commissioners is a substantial right that

may not be done away with capriciously or for no reason at all. Moreover, in such

instances, where the report of the commissioners may be disregarded, the trial court may

make its own estimate of value from competent evidence that may be gathered from the

record. The aforesaid joint venture agreement relied upon by the respondent judge, in the

absence of any other proof of valuation of said properties, is incompetent to determine just

compensation.

9. Visayan Refining Co. vs.Hon. Manuel Camus

G.R. No. L-15870

December 3, 1919

FACTS:

Sometime in September 1919, the Governor-General directed the Attorney-General to cause

condemnation proceedings to be begun for the purpose of expropriating a tract of land of an

area of about 1,100,463 square meters, commonly known as the site of Camp Tomas

Claudio. Said land is located in the municipality of Parañaque, Province of Rizal, and lies

along the water front of Manila Bay. It is stated in communication of the Governor-General

that the property in question is desired by the Government of the Philippine Islands for

military and aviation purposes.

In conformity with the instructions of the Governor-General, condemnation proceedings

were begun by the Attorney-General by filing a complaint in the name of the Government of

22

the Philippine Islands in the Court of First Instance of the Province of Rizal. Numerous

persons are named in the complaint as defendants because of their supposed ownership of

portions of the property intended to be expropriated. In the list of persons thus impleaded

appear the names of the three petitioners herein, namely, the Visayan Refining Co., Dean C.

Worcester, and Fred A. Leas, who are severally owners of different portions of the property

in question.

In the communication of the Governor-General, the Attorney-General was directed

immediately upon filing the complaint to ask the court to give the Government the possession

of the land to be expropriated, after the necessary deposit should be made as provided by

law.An order was accordingly made by the Honorable Judge Manuel Camus, of the Court of

First Instance of the Province of Rizal, fixing the value of the property provisionally at

P600,000 and ordering that the plaintiff be placed in possession, it being made to appear that

a certificate of deposit for the amount stated had been delivered to the provincial treasurer.

During the proceedings, the three respondents, Visayan Refining Co., et. al., interposed a

demurrer, questioning the validity of the proceedings on the ground that there is no Act of the

Philippine Legislature authorizing the exercise of the power of eminent domain to acquire

land for military or aviation purposes. They also alleged that, to the effect that the deposit in

court of the sum of P600,000.00, had been made without authority of law.

ISSUE:

Whether or not an expropriation proceeding cannot be maintained by the Philippine

Government in the absence of a statute authorizing the exercise of the power of eminent

domain for public use?

HELD:

The Court held in the negative. The contentions of the petitioners, in whatever way they may

be understood or expressed, are not well founded. The Courtis of the opinion that in this

jurisdiction at least expropriation proceedings may be maintained upon the exclusive

initiative of the Governor-General, without the aid of any special legislative authority other

23

than that already on the statute books. Furthermore, if the Government complies with the

requirements of law relative to the making of a deposit in court, provisional possession of the

property may be at once given to it, just as is permitted in the case of any other person or

entity authorized by law to exercise the power eminent domain. Special legislative authority

for the buying of a piece of land by the Government is no more necessary than for buying a

paper of pain; and in the case of a forced taking of property against the will of the owner, all

that can be required of the government is that should be able to comply with the conditions

laid down by law as and when those conditions arise.

The contention that the authority to maintain such a proceeding cannot be delegated by the

Legislature to the Chief Executive, in the Court’s opinion is wholly erroneous and apparently

has its basis in a misconception of fundamentals. It is recognized by all writers that the power

of eminent domain is inseparable from sovereignty being essential to the existence of the

State and inherent in government even in its most primitive forms. Philosophers and legists

may differ as to the grounds upon which the exercise of this high power is to be justified, but

no one can question its existence. No law, therefore, is ever necessary to confer this right

upon sovereignty or upon any government exercising sovereign or quasi-sovereign powers.

At any rate the conclusion is irresistible that where the Legislature has expressly conferred

the authority to maintain expropriation proceedings upon the Chief Executive, the right of the

latter to proceed therein is clear. As is said by the author of the article from which we have

already quoted, "Once authority is given to exercise the power of eminent domain, the matter

ceases to be wholly legislative. The executive authorities may then decide whether the power

will be invoked and to what extent."

The power of eminent domain, with respect to the conditions under which the property is

taken, must of course be exercised in subjection to all the restraints imposed by constitutional

or organic law. The two provisions by which the exercise of this power is chiefly limited in

this jurisdiction are found in the third section of the Jones Act, already mentioned, which

among other things declares (1) that no law shall be enacted which shall deprive any person

of property without due process of law and (2) that private property shall not be taken for

24

public use without just compensation. The latter of these provisions is directly aimed at the

taking of property under the exercise of the power of eminent domain; and as this

requirement, in connection with the statutes enacted to make sure the payment of

compensation, usually affords all the protection that the owner of property can claim, it

results that the due process clause is rarely invoked by the owner in expropriation

proceedings.

The writ prayer for in the petition before us, therefore, cannot be issued. The application is

accordingly denied, with costs against the petitioners.

10. Republic vs. Gingoyon

G.R. No. 166429

December 19, 2005 

FACTS:

The Ninoy Aquino International Airport Passenger Terminal III (NAIA 3) was conceived,

designed and constructed to serve as the country's show window to the world. Despite the

apparent completion of the terminal complex way back it has not yet been operated.

The case was raffled to the Pasay City RTC, presided by respondent judge Hon. Henrick F.

Gingoyon (Hon. Gingoyon). Rep. Act No. 8974 applies in this case, particularly insofar as it

requires the immediate payment by the Government of at least the proffered value of the

NAIA 3 facilities to PIATCO and provides certain valuation standards or methods for the

determination of just compensation. RTC erroneously applied the provisions of Rule 67 of

the Rules of Court, instead of Rep. Act No. 8974, in ascertaining compliance with the

requisites for the issuance of the writ of possession. The Government filed a Motion for

Inhibition of Hon. Gingoyon. The RTC denied these motions in an Omnibus Order.

Hence, this Petition for Certiorari and Prohibition for the nullification of the RTC orders and

for the inhibition of Hon. Gingoyon from taking further action on the expropriation case.

25

ISSUE:

Whether or not expropriation can be conducted by mere deposit of the assessed value of the

property?

HELD:

The Court held in the negative.In expropriation proceedings, entitlement of writ of

possession is issued only after direct payment of just compensation is given to property

owner on the basis of fairness. The same principle applied in the 2004 Jurisprudence

Resolution and the latest expropriation law (RA No. 8974).

11. Bank of America, NT and SAvs.American Realty Corp.

G.R. No. 133876

December 29, 1999

FACTS:

Petitioner Bank of America NT & SA (BANTSA) is an international banking and financing

institution duly licensed to do business in the Philippines, organized and existing under and

by virtue of the laws of the State of California, United States of America while private

respondent American Realty Corporation (ARC) is a domestic corporation.

Bank of America International Limited (BAIL), on the other hand, is a limited liability

company organized and existing under the laws of England.

As borne by the records, BANTSA and BAIL on several occasions granted three major

multi-million United States (US) Dollar loans to the following corporate borrowers: (1)

Liberian Transport Navigation, S.A.; (2) El Challenger S.A. and (3) EshleyCompaniaNaviera

S.A. (hereinafter collectively referred to as "borrowers"), all of which are existing under and

by virtue of the laws of the Republic of Panama and are foreign affiliates of private

respondent.

26

Due to the default in the payment of the loan amortizations, BANTSA and the corporate

borrowers signed and entered into restructuring agreements. As additional security for the

restructured loans, private respondent ARC as third party mortgagor executed two real estate

mortgages, 4 dated 17 February 1983 and 20 July 1984, over its parcels of land including

improvements thereon, located at Barrio Sto. Cristo, San Jose Del Monte, Bulacan.

Eventually, the corporate borrowers defaulted in the payment of the restructured loans

prompting petitioner BANTSA to file civil actions 5 before foreign courts for the collection

of the principal loan.

On 16 December 1992, petitioner BANTSA filed before the Office of the Provincial Sheriff

of Bulacan, Philippines an application for extrajudicial foreclosure 6 of real estate mortgage.

On 22 January 1993, after due publication and notice, the mortgaged real properties were

sold at public auction in an extrajudicial foreclosure sale, with Integrated Credit and

Corporation Services Co (ICCS) as the highest bidder for the sum of Twenty four Million

Pesos (P24,000.000.00).

On 12 February 1993, private respondent filed before the Pasig Regional Trial Court, Branch

159, an action for damages against the petitioner, for the latter's act of foreclosing

extrajudicially the real estate mortgages despite the pendency of civil suits before foreign

courts for the collection of the principal loan which was granted by the courts.

ISSUE:

Whether or not a mortgage creditor may institute against the mortgage debtor either a

personal action for debt or a real action to foreclose the mortgage an election of one remedy

operates as a waiver of the other?

HELD:

In our jurisdiction, the remedies available to the mortgage creditor are deemed alternative

and not cumulative. Notably, an election of one remedy operates as a waiver of the other.

27

For this purpose, a remedy is deemed chosen upon the filing of the suit for collection or upon

the filing of the complaint in an action for foreclosure of mortgage, pursuant to the provision

of Rule 68 of the of the 1997 Rules of Civil Procedure. As to extrajudicial foreclosure, such

remedy is deemed elected by the mortgage creditor upon filing of the petition not with any

court of justice but with the Office of the Sheriff of the province where the sale is to be made,

in accordance with the provisions of Act No. 3135, as amended by Act No. 4118.

Thus, in Cerna vs. Court of Appeals, 22 we agreed with the petitioner in said case, that the

filing of a collection suit barred the foreclosure of the mortgage:

A mortgagee who files a suit for collection abandons the remedy of foreclosure of

the chattel mortgage constituted over the personal property as security for the debt

or value of the promissory note when he seeks to recover in the said collection suit.

. . . When the mortgagee elects to file a suit for collection, not foreclosure, thereby

abandoning the chattel mortgage as basis for relief, he clearly manifests his lack of

desire and interest to go after the mortgaged property as security for the promissory

note . . . .

Contrary to petitioner's arguments, we therefore reiterate the rule, for clarity and emphasis,

that the mere act of filing of an ordinary action for collection operates as a waiver of the

mortgage-creditor's remedy to foreclose the mortgage. By the mere filing of the ordinary

action for collection against the principal debtors, the petitioner in the present case is

deemed to have elected a remedy, as a result of which a waiver of the other necessarily

must arise. Corollarily, no final judgment in the collection suit is required for the rule on

waiver to apply.

12. Danao vs. Court of Appeals

G.R. No. L-48276

September 30, 1987

FACTS:

28

In 1963, spouses Pedro Danao and Concepcion S. Damao was granted a commercial credit

line of P20,000.00 with the People’s Bank and Trust Company. The parties executed a

Commercial Credit Agreement and Mortgage wherein a parcel of land in Baguio together

with the buildings and improvements thereon was given as a security. The obligation was

fully paid in 1968.

It appears that in 1963, Antonio Co Kit and Pedro Danao signed a promissory note with the

bank agreeing to pay the note, jointly and severally, within 179 days after date. The check for

the proceeds of the note was issued in the name of Antonio Co Kit alone. The note was

renewed by Antonio Co Kit and Pedro Danao which they promised to pay the amount, jointly

and severally.The bank demanded payment from Antonio Co Kit and Pedro Danao for the

balance of the promissory note. When no payment was received, the bank filed a complaint

in the City Court of Baguio against Antonio Co Kit and Pedro Danao, for collection of sum

of money. The City Court dismissed the complaint for lack of interest on the part of the

plaintiff.

The branch manager of the bank wrote a letter to Pedro Danao, informing the latter that they

had filed a petition for foreclosure to the City Sheriff of Baguio City, stating therein that the

parcel used as a security for Spouses Danao’s credit line will be sold at public auction.

Notice of public auction sale was published in a weekly newspaper published and edited in

the City of Baguio and which is of wide circulation in the City, province of Benguet and in

the Philippines, for three consecutive weeks, once a week. Copies of the notice were also

posted in three public and conspicuous places in Baguio for the information of the public. In

the published notice of public auction sale, it is stated that in the petition for foreclosure it is

alleged that Mortgagors’ spouses PEDRO DANAO and CONCEPCION DANAO, . . ., . . .

failed to pay the . . . loan when it fell due thereby violating the terms and conditions of the

real estate mortgage above mentioned.

In March 1971, counsel for the People’s Bank, Baguio Branch, wrote a letter, informing the

Bank of the full payment of the obligations of Antonio Co Kit and Pedro Danao. The branch

29

manager of the People’s Bank executed a cancellation of the real estate mortgage, stating

therein that the mortgagors had fully paid the obligation or indebtedness secured by the

mortgage.

In 1972, Pedro Danao and Concepcion S. Danao filed a complaint for damages against the

Bank of Philippine Islands, as successor to the People’s Bank and Trust Company, in the

Court of First Instance of Manila. The complaint alleged, inter alia, that both the petition for

foreclosure and the notice of public auction sale published in the ‘Baguio Midland Courier’

have neither legal nor factual bases, because (1) while the credit line was availed of from

time to time in different amounts by promissory notes, the credits and loans obtained were

duly paid in 1968 and since then no further loans were availed of under the credit line

secured by mortgage of the plaintiffs’ properties; (2) the plaintiffs’ alleged indebtedness

mentioned in the defendant’s petition for foreclosure and in the consequent notice of public

auction sale was the balance due on a ‘clean loan’ granted by the defendant to Antonio Co

Kit, although admittedly the promissory note was co-signed by plaintiff Pedro Danao, and

the same was a distinct and separate transaction from the plaintiffs’ credit line, and was not

covered nor secured by the plaintiffs’ properties mortgaged to the defendant.

The complaint further alleged that the publication of the notice of public auction sale in the

‘Baguio Midland Courier’ was malicious and/or with deliberate intent, or was due to gross

negligence, causing the plaintiffs, who are respected members of the community of Baguio

City, untold mental and moral anguish, serious anxiety, besmirched reputation and social

humiliation; that as a result of his social humiliation, anxiety, mental and moral anguish,

plaintiff Pedro Danao suffered serious heart attack and was hospitalized and confined in bed

for a period of one year, causing him to incur hospitalization and medical expenses, and

resulting in the loss of his income from his medical practice. The plaintiffs ask for actual or

compensatory, moral and exemplary damages, as well as attorney’s fees.

The People’s Bank filed a counterclaim and the issues were joined. The Court of First

Instance of Manila rendered judgment in favor of the plaintiffs and against the defendant

30

ordering the latter to pay the former actual and compensatory damages, moral damages, and

exemplary damages. The court dismissed the counterclaim.

From this decision only the Bank of the Philippine Islands (BPI) as successor of Peoples

Bank and Trust Company appealed. Respondent Court or Appeals affirmed the trial court’s

decision with some modifications. Both parties moved for reconsideration. The motion for

reconsideration filed by Pedro and Concepcion Danao, as plaintiff-appellees was denied by

the respondent Court’ while the motion for reconsideration filed by BPIs, as defendant-

appellant was also denied.

Hence, these petitions filed by both parties which were consolidated. During the pendency of

the case, Pedro Danao died as was substituted by his heirs.

The Danaos contended that the real estate mortgage executed by them in favor of defendant

did not secure the solidary obligation of Dr. Danao upon the promissory note signed by him

jointly and severally with Antonio C. Kit and therefore, defendant’s act in foreclosing said

mortgagee extra-judicially was unwarranted.

ISSUE:

Whether the bank could validly exercise both the actions it availed?

HELD:

No. The bank, in opting to file a civil action in the Baguio City Court for the collection of the

unpaid balance plus interest has abandoned its mortgage lien on the property in question.The

rule is now settled that a mortgage creditor may elect to waive his security and bring, instead,

an ordinary action to recover the indebtedness with the right to execute a judgment thereon

on all the properties of the debtor, including the subject matter of the mortgage . . ., subject to

the qualification that if he fails in the remedy by him elected, he cannot pursue further the

remedy he has waived.

31

Anent real properties in particular, the Court has laid down the rule that a mortgage creditor

may institute against the mortgage debtor either a personal action for debt or a real action to

foreclose the mortgage. In other words, he may pursue either of the two remedies, but not

both.

For non-payment of a note secured by mortgage, the creditor has a single cause of action

against the debtor. This single cause of action consists in the recovery of the credit with

execution of the security. In other words, the creditor in his action may make two demands,

the payment of the debt and the foreclosure of the mortgage. But both demands arise from

the same cause, the non-payment of the debt, and, for that reason, they constitute a single

cause of action. Though the debt and the mortgage constitute separate agreements, the latter

is subsidiary to the former, and both refer to one and the same obligation. Consequently there

exists only once cause of action for a single breach of that obligation.

Plaintiff, then, by applying the rule above stated cannot split up his single cause of action by

filing a complaint for payment of the debt, and thereafter another complaint for foreclosure

of the mortgage. If he does so, the filing of the first complaint will bar the subsequent

complaint. By allowing the creditor to file two separate complaints simultaneously or

successively, one to recover his credit and another to foreclose his mortgage, we will, in

effect, be authorizing him plural redress for a single breach of contract at much cost to the

courts and with so much vexation and oppression to the debtor.

A rule that would authorize the plaintiff to bring a personal action against the debtor and

simultaneously or successively another action against the mortgaged property, would result

not only in multiplicity of suits so offensive to justice and obnoxious to law and equity but

also in subjecting the defendant to the vexation of being sued in the place of his residence or

of the residence of the plaintiff, and then again in the place where the property lies.

Evidently, the prior recourse of the creditor bank in filing a civil action against the Danao

spouses and subsequently resorting to the complaint of foreclosure proceedings, are not only

32

a demonstration of the prohibited splitting up of a cause of action but also of the resulting

vexation and oppression to the debtor.

Both the lower court and the Court of Appeals found that the People’s Bank (succeeded by

the BPI) acted unlawfully and without justification in extrajudicially foreclosing the disputed

mortgage and hence the Danao spouses are entitled to damages.

13. GSIS vs. CFI OF Iloilo Branch III

G.R. No. 45322

July 5, 1989

FACTS:

In 1957, a real estate loan payable in monthly installments within a period of ten (10) years

with 7% interest per annum, was granted to the spouses Ramon and NelitaBacaling by the

petitioner, GSIS for the development of the Bacaling-Moreno subdivision. To secure the

repayment of the loan, the Bacalings executed in favor of the GSIS a real estate mortgage on

four (4) lots owned by them.

Out of the approved loan of P600,000, only P240,000 had been released to them by the GSIS

as of November 11, 1957.

The Bacalings failed to finish the subdivision project and pay the amortizations on the loan

so the GSIS, filed in the Court of First Instance of Iloilo a complaint for judicial foreclosure

of the mortgage During the pendency of the case, Ramon Bacaling passed away.

The court ordered the widow, for herself and as administratrix of the estate of Ramon

Bacaling, to pay the GSIS. Mrs. Bacaling failed to pay the judgment debt within 90 days

after receipt of the decision of the court. Consequently, the mortgaged lots were sold at

public auction where the GSIS was the highest bidder at the sale.

The GSIS filed a motion for confirmation of the sale of the property to it and asked for a

33

deficiency judgment against the mortgagor, its bid being inadequate to cover the judgment

debt which had swelled.

Respondent Maria Teresa Integrated Development Corporation (MTIDC), as alleged

assignee of the mortgagor’s "right of redemption," filed a "Motion to Exercise the Right of

Redemption" The motion was granted by the trial court. A China Banking Corporation check

in the amount of P1,100,000 was delivered by MTIDC to the GSIS as payment of the

redemption price. However, the check was dishonored by the drawee bank because it was

drawn against a closed account.

On motion of the GSIS, the court issued an order declaring null and void the redemption of

the property by respondent MTIDC.

Thereafter, written proposals were sent by said respondent to the GSIS for the redemption of

the foreclosed property, but the GSIS required cash payment of the redemption price.

In 1975, respondent NelitaBacaling filed a motion to re-open the case so she could prove the

inadequacy of the price of the sale of the mortgaged property but this was opposed by the

GSIS filed The respondent court denied Nelita’s motion, confirmed the sale of the mortgaged

property, and rendered a deficiency judgment in favor of GSIS.

In 1975, fourteen (14) years after the foreclosure sale and almost three (3) years after the

court had annulled its redemption of the foreclosed property, respondent MTIDC filed a

motion for reconsideration of the court’s order and sought the restoration of its right of

redemption. The court, over the strong opposition of the GSIS, reconsidered its order and

granted MTIDC a period of one year after the finality of its order to redeem the Bacaling

properties.

The GSIS sought a reconsideration of that order on the ground that the court may not extend

the period for the redemption of the property. The court modified its order by giving MTIDC

one (1) year from January 19, 1976 within which to redeem the Bacaling property, instead of

34

one year from the finality of the January 19, 1976 order. Petitioner received a copy of this

last order on February 12, 1976.

On March 1, 1976, the GSIS appealed by certiorari to the Supreme Court raising purely legal

questions

In her Comment on the petition for review, NelitaVda. de Bacaling asked for the dismissal of

GSIS’ petition on the grounds that: (1) the appeal has become moot and academic because

the one-year redemption period fixed by the trial court had expired without the properties

being redeemed; and (2) the questioned order is also pending appeal in the Court of Appeals

hence, the case should be remanded to that Court.

The Court denied the motion to remand this appeal to the Court of Appeals.

ISSUE:

Whether or not a trial court may grant or fix another period for the redemption of the

foreclosed property by the assignee of the mortgagor’s equity of redemption?

HELD:

The Court held in the negative. The Court found merit in the appeal. Sections 2 and 3, Rule

68 of the Rules of Court provide:

"SEC. 2. Judgment on foreclosure for payment or sale. — If upon the trial in such action the

court shall find the facts set forth in the complaint to be true, it shall ascertain the amount due

to the plaintiff upon the mortgage debt or obligation, including interest and costs, and shall

render judgment for the sum so found due and order that the same be paid into court within a

period of not less than ninety (90) days from the date of the service of such order, and that in

default of such payment the property be sold to realize the mortgage debt and costs."

"SEC. 3. Sale of mortgaged property; effect. — When the defendant, after being directed to

do so as provided in the last preceding section, fails to pay the principal, interest, and costs at

35

the time directed in the order, the court shall order the property to be sold in the manner and

under the regulations that govern sales of real estate under execution. Such sale shall not

affect the rights of persons holding prior encumbrances upon the property or a part thereof,

and when confirmed by an order of the court, it shall operate to divest the rights of all the

parties to the action and to vest their rights in the purchaser, subject to such rights of

redemption as may be allowed by law."

There is no right of redemption from a judicial foreclosure sale after the confirmation of the

sale, except those granted by banks or banking institutions as provided by the General

Banking Act. This has been the consistent interpretation of Rule 68 in a long line of decisions

of this Court.

The Court has already held that in mortgage foreclosures the rights of the mortgagee and

persons holding under him are cut off by the sale, when duly confirmed, and with them the

equity of redemption. The reason for that holding is that the right of redemption being purely

statutory, and there being no statute conferring that right, it does not exist.

When the foreclosure sale is validly confirmed by the court title vests upon the purchaser in

the foreclosure sale, and the confirmation retroacts to the date of the sale. Only foreclosure of

mortgages to banking institutions and those made extrajudicially are subject to legal

redemption, by express provision of statute, and the present case does not come under

exceptions.

Where the foreclosure is judicially affected, however, no equivalent right of redemption

exists. The law (Sec. 3, Rule 68, Rules of Court) declares that a judicial foreclosure sale,

‘when confirmed by an order of the court, . . . shall operate to divest the rights of all the

parties to the action and to vest their rights in the purchaser, subject to such rights of

redemption as may be allowed by law.’ Such rights exceptionally ‘allowed by law’ (i.e., even

after confirmation by an order of the court) are those granted by the charter of the Philippine

National Bank (Acts No. 2747 and 2938), and the General Banking Act (R.A. 337).

36

These laws confer on the mortgagor, his successors in interest or any judgment creditor of the

mortgagor, the right to redeem the property sold on the foreclosure — after confirmation by

the court of the foreclosure sale — which right may be exercised within a period of one (1)

year, counted from the date of registration of the certificate of sale in the Registry of

Property.

But, to repeat, no such right of redemption exists in case of judicial foreclosure of a mortgage

if the mortgagee is not the PNB or a bank or banking institution. In such a case, the

foreclosure sale, ‘when confirmed by an order of the court, . . . shall operate to divest the

rights of all the parties to the action and to vest their rights in the purchaser.’ There then

exists only what is known as the equity of redemption. This is simply the right of the

defendant mortgagor to extinguish the mortgage and retain ownership of the property by

paying the secured debt within the 90-day period after the judgment becomes final, in

accordance with Rule 68, or even after the foreclosure sale but prior to its confirmation.

Since the GSIS is not a bank or banking institution, its mortgage is covered by the general

rule that there is no right of redemption after the judicial foreclosure sale has been confirmed.

Hence, Judge NumerianoEstenzo exceeded his jurisdiction and acted with grave abuse of

discretion in granting the respondent, MTIDC, another one-year period to redeem the

Bacaling properties over the opposition of petitioner GSIS as mortgagee-purchaser thereof at

the public sale.

14. Reyes vs. Tolentino

G.R. No. L-29142

November 29, 1971

FACTS:

A suit was filed before the CFI of Rizal (Quezon City) for plaintiff-appellant Arsenio Reyes

to be declared the absolute owner of a parcel of registered land, which he purchased in an

extrajudicial foreclosure sale, conducted by defendant sheriff Benito Macrohon, and to

declare as null and void the redemption of the said land by the defendants-appellees Enrique

37

R. Tolentino and Leonora P. Tolentino, who were the mortgagors in the extrajudicially

foreclosed mortgage.

In 1957, defendants Enrique R. Tolentino and Leonora P. Tolentino, spouses, obtained a loan

from the GSIS in whose favor they executed a real estate mortgage over a parcel of land and

all its improvements, situated in Quezon City, with a special power to sell the same in case of

non-payment. The defendants failed to pay some of the loan amortizations on their due dates,

thus making the whole indebtedness due and payable. Because of their failure to pay the

whole obligation, the GSIS extrajudicially foreclosed the mortgage in accordance with the

provisions of Act No. 3135, as amended.

Defendant Benito Macrohon, as Sheriff of Rizal, sold the property mortgaged at a public

auction to plaintiff Arsenio Reyes as the highest bidder. Defendant Macrohon issued the

corresponding certificate of sale containing a condition that the period of redemption would

expire one (1) year from and after the date of registration thereof. On the same day, plaintiff

protested against such condition embodied in the certificate of sale.

In May 1964, the sheriff’s certificate of sale was registered with the office of the Register of

Deeds of Quezon City; and defendants Enrique R. Tolentino and Leonora P. Tolentino paid

to the defendant Sheriff the redemption price of the property foreclosed.

Plaintiff initiated this action because of the refusal of the defendants to vacate the property

foreclosed and to pay to the plaintiff monthly rental therefor from the time the period for

them to redeem expired up to the time they actually vacate the premises.

According to appellant Reyes, the redemption is invalid for having been made beyond the

one-year period, as provided for in Section 6 of Act No. 3135, as amended by Act No. 4118,

to wit:

"Section 6. In all cases in which the extrajudicial sale is made under the special power

hereinbefore referred to, the debtor, his successors-in-interest, or any judicial creditor or

38

judgment creditor of said debtor, or any person having a lien on the property subsequent to

the mortgage or deed of trust under which the property is sold, may redeem the same at any

time within the term of one year from and after the date of sale; and such redemption shall be

governed be the provisions of sections 464 to 466, inclusive, of the Code of Civil Procedure,

(now Sections 29 to 31, Rule 39 of the Revised Rules of Court) in so far as these are not

inconsistent with the provisions of this Act."

The trial court however, held that since the sale was registered on 14 May 1964, the

commencement date of the redemption period, the redemption on 4 March 1965 was timely

made and valid.

Hence, this direct appeal on points of law. Appellant contended that the redemption period in

an extrajudicial foreclosure should be reckoned from the date of the auction sale, and not

from the date of the registration of the sale in the office of the Register of Deeds.

ISSUE:

Whether or not the date of public auction or the date of registration of the sale isthe period of

redemption?

HELD:

The period of redemption of registered land sold at an extrajudicial foreclosure sale under

Act 3135, as amended, should be counted from the date of registration of the certificate of

sale in the office of the register of deeds concerned and not from the date of the public

auction.

The Rule that the reckoning date for redemption is from the date of the auction sale, not from

the registration of the sale has been abandoned as early as 1959, and the reasons therefor

were set forth, amplified and developed in subsequent decisions of the Court. The rule is now

that the reckoning date for redemption is from registration of the sale, not the date of the

auction sale.

39

The argument of appellant that registration of the auction sale is not necessary as between

immediate parties is rejected because such argument overlooks that the rule laid down is

precisely for the person entitled to exercise the right of redemption, who necessarily is the

owner of the property sold and not any third party.

Even if the mortgage contract is a voluntary transaction and the sale was known to the

principal, the extrajudicial foreclosure of the mortgage, including the right of redemption by

the owner-mortgagor, is governed, not by the general law or the Civil Code, but by a special

law, Act 3135, as amended, in conjunction with the Land Registration Act and the pertinent

provisions of the Rules of Court, that provide for registration as a mandatory requirement.

15. The Government of P.I. vs. De Las Cajigas

G.R. No. 33913 (55 Phil 667)

February 20, 1931

FACTS:

This action was brought by the Government of the Philippine Islands for the purpose of

foreclosing a mortgage on real property located in the City of Manila, which mortgage was

executed, with the approval of the court, by Candelario de las Cajigas, in his capacity as

administrator of the estate of his deceased wife, Dolores G. Azaola de Cajigas, for the

purpose of securing the repayment of P15,000 advanced in the form of a loan by the

Philippine Postal Savings Bank.

During trial, Candelario de las Cajigas did not appear to make any defense, and the

Philippine Trust Company admitted the material allegations of the complaint.

Judgment was entered directing that the amount of the mortgage debt should be paid into

court within the period of 90 days, as prescribed by law, in default of which it was ordered

that the mortgaged property should be sold for the satisfaction of the debt.

40

The debt was not paid, and after a delay of some two years resulting from the indulgence of

the creditor, the property was exposed to sale and was purchased by Jose Catot. The

confirmation of this sale was opposed by Candelario de las Cajigas, but the sale was,

nevertheless confirmed, and Cajigas appealed.

Jose Rodriguez Serra was at first named as a defendant, in the character of administrator of

the testate estate of his wife, Encarnacion Serra, who held a subordinate lien on the personal

interest of Candelario de las Cajigas; but this lien having been satisfied by Jose de las

Cajigas, son of the defendant Candelario de las Cajigas, the court granted a motion asking

that the estate of Encarnacion Serra be excluded as a defendant.

In the same motion it was requested that Jose de las Cajigas, as successor to the right of

Encarnacion Serra, should be included as a defendant but notwithstanding the granting of

said motion by the court no answer was required from Jose de las Cajigas, and he was

thereafter ignored.

In the course of the proceedings the Philippine Trust Company was admitted as a defendant,

and answer was interposed by the bank in the character of successor to Candelario de las

Cajigas, administrator, upon it being made to appear that the latter had been removed from

the office of administrator by the court having charge of the administration and that the

Philippine Trust Company had been appointed as successor to the office of said

administrator.

Appellant insisted that the heirs of Dolores G. Azaola de Cajigas should have been

impleaded.

It was also contended that appellant Candelario de las Cajigas was not notified of the motion

which was presented by the plaintiff in order to procure the execution of the judgment of

foreclosure. It was insisted that the sale could not be effected without notification to the

debtor party of the motion for the execution of the judgment.

41

It was also contended that the sale was invalid because, in the published advertisement

announcing the sale, the indebtedness constituting a lien upon the property was overstated by

about P5,000.

ISSUES:

1) Whether the foreclosure proceeding was conducted against all of the indispensable

parties.

2) Could the sale be effected without notification to the debtor party of the motion for the

execution of the judgment?

HELD:

Yes. It was only after the foreclosure had reached the stage when the sale was about to be

confirmed that Candelario de las Cajigas appeared and opposed the confirmation on the

grounds hereinafter mentioned.

It is not entirely clear that the appellant Candelario de las Cajigas really has any interest in

the subject matter of the lawsuit which would entitle him to maintain this appeal; because he

has been supplanted as administrator, and the personal interest which he had in the property

has been alienated by him.

But ignoring this point, and assuming that he has an interest in the property subject to this

foreclosure which would entitle him to be heard, the Court was of the opinion that none of

the technical grounds upon which he seeks to defeat the proceeding are well taken.

It will be noted, however, that the property in question is covered by a Torrens title, and the

mortgage was executed by the administrator, with the approval of the court, after the death of

Dolores G. Azaola de Cajigas, the original owner.

Under section 89 of the Land Registration Act (No. 496) real estate registered under the

Torrens system passes upon the death of the owner to the executor or administrator of the

deceased, whether such owner dies testate or intestate.

42

There can be, therefore, no question as to the validity of the mortgage, and inasmuch as the

legal title was vested in the administrator when the mortgage was executed, such

administrator was the only indispensable party defendant in the foreclosure proceeding. The

interest of the heirs of the original owner was derivative and contingent, and for the purposes

of foreclosure they were represented by the administrator who was the true party in interest;

and even supposing that the heirs might have been proper parties in interest within the

meaning of section 255 of the Code of Civil Procedure, a valid foreclosure could be effected

although they were not impleaded.

The effect of the failure to make a subordinate lienholder a party to a foreclosure proceeding

is, not that the foreclosure is void as between the parties to the proceeding, but that the

foreclosure is ineffective as against such subordinate lienholder, with the consequence that

there remains in him an unforeclosed equity of redemption.

The same reasoning holds with respect to Jose de las Cajigas in his character as transferee of

the subordinate lien originally vested in Encarnacion Serra. The failure to implead him

formally as a party, in lieu of the administrator of Encarnacion Serra, when the transfer was

made known to the court, did not invalidate the foreclosure, but at most might have left in

him a right of redemption, upon the existence of which right it is not necessary here to pass

an opinion. While the subordinate lienholder is a proper party defendant in order to make a

decree of foreclosure completely binding on all interests, he is not an absolutely

indispensable party in the foreclosure proceeding.

The judgment of foreclosure had become final, and the motion asking for execution was a

motion which in its very nature was grantable as of course; and the failure to give notice of

the motion is no ground for nullifying the sale.

The debt was advertised in the amount fixed by the court in its judgment as the amount of the

mortgage debt, with interest. This amount had, however, been reduced by payments made by

the judgment debtor to the amount, approximately, which was bid for the property at the sale.

43

The error in stating the amount of the debt in the notice of sale does not affect the validity of

the mortgage. A mortgage debtor has a right to satisfy the indebtedness or any part of it, at

any time, and it would be dangerous doctrine to make the efficacy of the foreclosure sale

depend upon the precise correctness of the statement of the amount of the mortgage debt.

Under the provisions relating to the foreclosure of mortgages contained in the present Code

of Civil Procedure, no upset price is fixed, and every person desirous of purchasing at a

foreclosure sale knows that the property will be sold for the highest amount which is bid for

it at the sale, regardless of the amount of the indebtedness fixed in the judgment. No person

having a bona fide desire to purchase the mortgaged property would be in the least concerned

over the amount of the indebtedness.

The error in the overstatement of the indebtedness could not materially affect the rights of

anybody concerned in the sale.

All of appellant’s contentions have no substantial merit. The Court held that the sale was

valid and that the trial court committed no error in confirming it.

16. Industrial Finance Corp. vs. Apostol

G.R. No. L-35453

September 15, 1989

FACTS:

Spouses Joaquin Padilla and Socorro Padilla bought on credit three units of Isuzu trucks from

the Industrial Transport and Equipment, Inc. They executed a promissory note for P159,600,

the balance of the purchase price, securing payment thereof by a chattel mortgage of said

trucks and, as additional collateral, a real estate mortgage on their property covered by

Transfer Certificate of Title No. T-133625 in favor of the seller.  Subsequently, petitioner

indorsed the note and assigned the real estate mortgage to petitioner Industrial Finance

44

Corporation (IFC), which assignment was duly registered in the Registry of Deeds of Quezon

City and annotated on the title of the mortgaged realty.

In view of the failure of the Padillas to pay several installments on the note, the assignee IFC

sued Joaquin Padilla in the Court of First Instance of Rizal (Quezon City) for the recovery of

the unpaid balance on the note including attorney's fees.  In due time, a decision was

rendered in favor of plaintiff (IFC) and against defendant (Joaquin Padilla) to pay plaintiff.

On appeal to the Court of Appeals, the trial court was sustained except for the modification

that the attorney's fees were reduced to 12 % of the balance. As no appeal was brought by

either of the parties, the appellate court decision became final and executory.

Meanwhile, private respondents Juan Delmendo and Honorata Delmendo filed a complaint

against petitioner IFC, as principal party, and the Padilla spouses, as formal parties, in

respondent Court of First Instance (Civil Case No. Q-15942). The Delmendos alleged that

they were the transferees of the real property covered by Transfer Certificate of Title No. T-

133625 of the Quezon City Register of Deeds which was mortgaged earlier by the Padillas to

the Industrial Transport and Equipment, Inc. to secure the payment of a promissory note in

the sum of P 159,600 and then assigned to petitioner IFC. The Delmendos prayed for the

cancellation of the mortgage lien annotated on Transfer Certificate of Title No. T-133625 and

the delivery to them by petitioner of the owner's copy of said title with damages and

attorney's fees, considering that petitioner IFC had waived its rights over the mortgage when

it instituted a personal action against the Padillas in Civil Case No. Q-14417 for collection of

a sum of money.

Petitioner IFC moved for the dismissal of the complaint, contending that it had not waived its

right over the mortgage lien.

The Delmendos filed a motion for summary judgment which respondent trial court granted.

45

Upon denial of its motion for reconsideration, petitioner IFC came to this Court raising the

issue of whether, by filing a personal action for the recovery of a debt secured by a real

estate mortgage, petitioner is deemed to have abandoned, ipso jure, its mortgage lien on the

property in question.

ISSUE:

Whether or not filing a personal action for the recovery of a debt secured by a real estate

mortgage proper.

HELD:

The Court held in the affirmative. The above question is certainly far from novel. In a host

of decided cases, the most recent of which is Danao v. Court of Appeals,  this Court has

resolved this issue in the affirmative In Manila Trading and Supply Co. v. Co Kim and So

Tek, we declared:

The rule is now settled that a mortgage creditor may elect to waive his

security and bring, instead, an ordinary action to recover the

indebtedness with the right to execute a judgment thereon on all the

properties of the debtor, including the subject- matter of the mortgage,

subject to the qualification that if he fails in the remedy by him elected, he

cannot pursue further the remedy he has waived.

The case of Bachrach Motor Co., Inc. v. Icarangal and Oriental Commercial Co.,

Inc., which similarly involves a promissory note secured by a real estate mortgage, gives us

an extensive discussion on the rule, to wit:

For non-payment of a note secured by mortgage, the creditor has a single

cause of action against the debtor. This single cause of action consists in the

recovery of the credit with execution of the security. In other words, the

creditor in his action may make two demands, the payment of the debt and the

foreclosure of his mortgage. But both demands arise from the same cause, the

non-payment of the debt, and, for that reason, they constitute a single cause of

action. Though the debt and the mortgage constitute separate agreements, the

latter is subsidiary to the former, and both refer to one and the same

46

obligation. Consequently, there exists only one cause of action for a single

breach of that obligation. Plaintiff, then, by applying the rule above stated,

cannot split up his single cause of action by filing a complaint for foreclosure

of the mortgage. If he does so, the filing of the first complaint will bar the

subsequent complaint. By allowing the creditor to file two separate complaints

simultaneously or successively, one to recover his credit and another to

foreclose his mortgage, we will, in effect, be authorizing him plural redress

for a single breach of contract at so much cost to the courts and with so much

vexation and oppression to the debtor.

We hold, therefore, that, in the absence of express statutory provisions, a

mortgage creditor may institute against the mortgage debtor either a

personal action for debt or a real action to foreclose the mortgage. In

other words, he may pursue either of the two remedies, but not both. By such

election, his cause of action can by no means be impaired, for each of the two

remedies is complete in itself. Thus, an election to bring a personal action will

leave open to him all the properties of the debtor for attachment and

execution, even including the mortgaged property itself. And, if he waives

such personal action and pursues his remedy against the mortgaged property,

an unsatisfied judgment thereon would still give him the right to sue for a

deficiency judgment, in which case, all the properties of the defendant, other

than the mortgaged property, are again open to him for the satisfaction of the

deficiency. In either case, his remedy is complete, his cause of action

undiminished, and any advantages attendant to the pursuit of one or the other

remedy are purely accidental and are all under his right of election.

The end result is the discharge of the real estate mortgage and the Delmendos, having

purchased the mortgaged property, automatically step into the shoes of the original

mortgagors with every right to have the title delivered to them free from said encumbrance.

47

WHEREFORE, finding no error in the summary judgment under appeal, the same is hereby

affirmed in toto. Considering the length of time that this case has been pending, this decision

is declared immediately executory.

17. The Government of P.I. vs.Torralba Viuda de Santos

G.R. No. L-41573            

August 3, 1935

FACTS:

Margarita TorralbaViuda de Santos is assigned to be personally and as administratrix of the

estate of the deceased Epifanio de los Santos y Cristobal.

She was ordered by the lower court to pay the plaintiff with interest at 9% per annum,

coputed semi-annulaly, until fully paid, plus the amounts of taxes and insurance premiums.

In support of her appeal, the plaintiff govt of PI alleged that the lower court erred in holding

defendant liable as administratrix of the deceased.

ISSUE:

Whether or not the court a quo erred in holding defendant TorralbaViuda de Santos is liable

for any deficiency remaining unsatisfied after applying the proceeds of the sale of the

mortgaged properties to the amount of the judgment?

HELD:

The Court held in the negative. Sec 260 of the Code of Civil Procedure states that Upon the

sale of any real property, under a decree for a sale to satisfy a mortgage or other incumbrance

thereon, if there be a balance due to the complainant after applying the proceeds of the sale,

the court, upon motion, shall give a decree against the defendant for any such balance for

which, by the record of the case, he may be personally liable to the plaintiff, upon which

execution may issue immediately if the balance is all due at the time of the rendition of the

decree; otherwise the plaintiff shall be entitled to execution at such time as the balance

48

remaining would have become due by the terms of the original contract, which time shall be

stated in the decree. Therefore, court is permitted to do so.

18. Sps. Tirona vs. Alejo

G.R. No. 129313           

October 10, 2001

FACTS:

Petitioners filed a suit for ejectment against private respondent Nuez in the MeTC of

Valenzuela, Branch 81 for unlawfully occupying fishponds claimed to be owned by the

former. Nuez admitted that petitioners owned the fishponds, but averred that the MeTC had

no jurisdiction over the case as petitioners did not allege prior physical possession in their

complaint. The court rendered a judgment in favor of petitioners. Petitioners then filed a suit

for ejectment against private respondent Ignacio with the MeTC of Valenzuela, Branch 82

for the same allegations and the same relief as with the Nuez case. The MeTC dismissed the

case. In the appeal, the RTC ruled against petitioners holding that the two cases did not fall

within the jurisdiction of the lower court as they did not allege prior physical possession of

the property as required in complaints for forcible entry and provided for in Section 1 of Rule

70 of the Rules of Court.

ISSUE:

Whether or not the failure to allege prior physical possession in a case for forcible entry is

fatal to the jurisdiction of the inferior court?

HELD:

The Court held in the affirmative. The action of petitioners was one for forcible entry and not

for unlawful detainer. In the former, for the inferior court to acquire jurisdiction, the plaintiff

must allege his prior physical possession of the property and was thus deprived of it by any

of the means provided for in Section 1, Rule 70 of the Rules of Court. The complaints only

alleged unlawful deprivation of the property by respondents but petitioners failed to allege

prior physical possession. The deficiency did not allow the MeTC to acquire jurisdiction.

49

Neither will an amendment complaint be allowed, as submitted by petitioners, where the

court had no jurisdiction over the original complaint nor where the purpose of the

amendment is to confer jurisdiction upon the court.

The petition is denied.

19. Heirs of Demetrio Melchor vs. MELCHOR

G.R. No. 150633              

November 12, 2003

FACTS:

Petitioners, who are the heirs of DEMETRIO MELCHOR, claim to be the owners, by way of

succession, of the subject property allegedly in possession of respondent JULIO MELCHOR.

The subject property is a portion of the twenty hectares of land registered in the name of

PEDRO MELCHOR, evidenced by Original Certificate of Title. The said property was

purchased by the late DEMETRIO MELCHOR from PEDRO MELCHOR, the deceased

father of herein respondent JULIO MELCHOR. Since February 14, 1947 up to the present,

petitioners further allege that respondent has been occupying the subject property and has

been harvesting crops thereon and using it for grassing cows and carabaos. A demand letter

was allegedly sent by the petitioners to the respondent, demanding him to vacate and

surrender the said property, but the latter refused. The disagreement reached the barangay

authorities, which case was not amicably settled, resulting in the issuance of a certification to

file action.

Petitioners filed against respondent a complaint for ejectment before the MTC of Cauayan.

For his part, the defendant (now respondent) principally raised the matter of ownership by

alleging affirmative/special defenses, among others, that the parcel of land in possession of

the defendant is registered in the name of the deceased mother of the defendant, as per

Transfer of Certificate of Title No. T-274828 of the Registry of Deeds for Isabela, and that

the same property is now owned by the defendant having inherited the same from their late

mother. MTC said that ejectment is not the proper remedy.

50

ISSUE:

Whether or not CA committed a grave error when it ruled that the Second Amended

Complaint does not allege a sufficient cause of action for unlawful detainer?

HELD:

No. Even if petitioners may be correct in saying that prior physical possession by the plaintiff

need not be alleged in an action for unlawful detainer, the absence of such possession does

not ipso facto make their Complaint sufficient to confer jurisdiction on the MTC. In

ejectment cases, the jurisdiction of the court is determined by the allegations of the

complaint. The test for determining the sufficiency of those allegations is whether, admitting

the facts alleged, the court can render a valid judgment in accordance with the prayer of the

plaintiff.

As correctly held by the appellate court, forcible entry must be ruled out as there was no

allegation that the petitioners were denied possession of the subject property through any of

the means stated in Section 1, Rule 70 of ROC.

Neither was unlawful detainer satisfactorily alleged. In determining the sufficiency of a

complaint therefor, it is not necessary to employ the terminology of the law. Not averred in

this case, however, were certain essential facts such as how entry was effected, or how and

when dispossession started. Petitioners merely alleged their ownership of the land, which had

supposedly been possessed by respondent since 1947. There was no allegation showing that

his possession of it was initially legal -- by virtue of a contract, express or implied -- and that

it became illegal after the expiration of his right to possess.

Neither did the Complaint claim as a fact any overt act on the part of petitioners showing that

they had permitted or tolerated respondents occupancy of the subject property. It is a settled

rule that in order to justify an action for unlawful detainer, the owners permission or

tolerance must be present at the beginning of the possession. Since the Complaint did not

51

satisfy the jurisdictional requirements of a valid cause for forcible entry or unlawful detainer,

the appellate court was correct in holding that the MTC had no jurisdiction to hear the case.

20. Ross Rica Sales Center, Inc. vs. Sps. Ong

G.R. No. 132197

August 16, 2005

FACTS:

Petitioners filed a complaint for ejectment against Spouses Ong before the MTC of Mandaue

City. In the complaint, petitioners alleged the fact of their ownership of three (3) parcels of

land covered by TCT Nos. 36466, 36467 and 36468. They likewise acknowledged

respondent Elizabeth Ong’s ownership of the lots previous to theirs. On Januqry 26, 1995,

Atty. Joseph M. Baduel, representing Mandaue Prime Estate Realty, wrote SPOUSES ONG

informing them of its intent to use the lots and asking them to vacate within thirty (30) days

from receipt of the letter. But SPOUSES ONG allegedly refused to vacate, thereby

unlawfully withholding possession of said lots.

Petitioners had acquired the lands from Mandaue Prime Estate Realty through a sale made on

23 March 1995. In turn, it appears that Mandaue Prime Estate Realty had acquired the

properties from the SPOUSES ONG through a Deed of Absolute Sale dated 14 July 1994.

However, this latter deed of sale and the transfers of title consequential thereto were

subsequently sought to be annulled by SPOUSES ONG in a complaint filed on 13 February

1995 before the Mandaue RTC against Mandaue Prime Estate Realty. Per record, this case is

still pending resolution.

The MTC ordered Spouses Ong to vacate the premises in question and to peacefully turn

over possession thereof to petitioners. RTC affirmed the entirety of the decision of the MTC.

On appeal, CA ruled that MTC had no jurisdiction over sai case as there was no contract

between the parties, express or implied, as would qualify the same as one for unlawful

detainer. Thus, the assailed Orders of the MTC and RTC were sset aside. Hence, this petition

for review under Rule 45 of the Rules of Court.

52

ISSUE:

Whether or not the complaint satisfies the jurisdictional requirements for a case of unlawful

detainer properly cognizable by the MTC?

HELD:

The Court held in the affirmative. MTC and RTC has jurisdiction over the case of unlawful

detainer. The presence of a contract is not a requisite for unlawful detainer case.

The allegation in the complaint that there was unlawful withholding of possession is

sufficient to make out a case for unlawful detainer. It is equally settled that in an action for

unlawful detainer, an allegation that the defendant is unlawfully withholding possession from

the plaintiff is deemed sufficient, without necessarily employing the terminology of the law.

Hence, the phrase "unlawful withholding" has been held to imply possession on the part of

defendant, which was legal in the beginning, having no other source than a contract, express

or implied, and which later expired as a right and is being withheld by defendant. In the

subject complaint, RRSC & JKI alleged that they are the registered owners of the lots

covered by TCT Nos. 36466, 36467 and 36468. By their implied tolerance, they have

allowed SPOUSES ONG, the former owners of the properties, to remain therein.

Nonetheless, they eventually sent a letter to SPOUSES ONG asking that the latter vacate the

said lots. SPOUSES ONG refused, thereby depriving RRSC & JKI of possession of the lots.

Clearly, the complaint establishes the basic elements of an unlawful detainer case, certainly

sufficient for the purpose of vesting jurisdiction over it in the MTC.

53